Although the ExxonMobil company boasts of having a majority of Guyanese workers, the Stabroek Block Cost Recovery Audit for the years 2018-2020 has found that foreign nationals hired by the company are being paid significantly more.
According to the audit report, during a three-year period, foreign workers were paid a total of US$93.091 Million, making the wage bill for expats 18 times higher than the combined salaries of local workers.
In the Stabroek Block Cost Recovery Audit Report, which was completed by VHE Consulting, Exxon’s labour cost was divided into four areas – Exxon employees – US$5.1M; Exxon Affiliate (Expatriates) – U$93.091M; Exxon Affiliate (Time Writing) – US$594.4M; and Exxon Affiliate (Temporarily Assigned, US$66.404M – a total of US$759.046M over the three years that were audited.
Expats, according to the report, are paid 40% after tax bonus.
“EEPGL advised that Expats are paid an approximate 40% after-tax bonus as incentive for an Expat assignment in Guyana. EEPGL also provided examples showing employee pay is “equalized” so their pay is based on taxes in their home country and calculated so they see no financial impairment working outside of their home country. That is, from a tax standpoint, Expats are kept “whole,” with the added 40% bonus,” VHE said.
Alluding to sections of the Production Sharing Agreement, the audit firm said if expats are physically present in Guyana for more than 183 days, Guyana income tax is applicable. They are often engaged in drilling, geoscience and operations and financial.
The audit firm said the company’s records also suggest that between 93.3% and 98.61% of the expat labour costs were charged to the Stabroek Block.
“Expat employee costs are recoverable if the proper amount is allocated to Stabroek out of each department. The allocation percentage of each department Cost Object was scrutinized, with numerous exceptions in the report for instances where we do not believe 100% of a department’s costs should be charged 100% to Stabroek/Canje/Kaieteur operations, that a portion pertains to corporate and other non-recoverable tasks and responsibilities,” VHE said.
According to the report, between 91.3% and 98.26% of the oil giant’s labour costs were charged to the Stabroek Block from 2018 through 2020. It was noted that while the employee cost for the Stabroek Block for the three years, 2018 to 2020, stood at US$5.1M, the combined labour cost for the Kaieteur and Canje Blocks totaled US$292,000.
The auditing firm said while Exxon’s employee cost is recoverable, the correct amount must be allocated to Stabroek out of each department.
“The allocation percentage of each department Cost Object was scrutinized, with numerous exceptions in the report for instances where we do not believe 100% of a department’s costs should be charged 100% to Stabroek/Canje/Kaieteur operations, that a portion pertains to corporate and other non-recoverable tasks and responsibilities,” VHE told the PS.
The report was submitted to the Government in September and is currently under review.
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